A supplier agrees in writing to supply goods to a trader, stating the agreement is 'binding in honour only'. What is the effect?

Answer and explanation

Correct answer: A. The parties have probably expressly excluded legal relations, so the agreement is not enforceable as a contract

  1. Step 1: In Rose and Frank v Crompton the phrase 'honourable pledge' clause displaced the presumption in commercial dealings.
  2. Step 2: The presumption of legal intention in business agreements can be rebutted by clear express words.
Answer
The parties have probably expressly excluded legal relations, so the agreement is not enforceable as a contract.
Why not the others: The presumption can be rebutted; writing does not decide intention; capacity is unaffected.

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